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Matt Carthy MEP hits out at VAT Rules impact on Small Businesses

20 May, 2015 - by Matt Carthy MEP

Sinn Féin MEP for the Midlands North West Constituency, Matt Carthy, speaking in the European Parliament in Strasbourg this week highlighted the devastating impact that new VAT Rules, which were made effective on the 1st January 2015, will have on small businesses and sole traders who operate online.

Carthy stated:

"From 1 Jan 2015 sellers have to pay VAT in any EU buyer’s country, at that country’s VAT rate.  The new rules apply to “automated digital services” – that’s anything downloadable or used online, unless it’s custom-made.

"In addition, these rules are just the first wave of legislation.  Similar rules are planned to extend to all goods and services as early as 2016.

"And whilst it is recognised that the new Rules on VAT were designed with a positive intention, it must also be recognised that as it stands the implementation of such rules will have a serious harmful and destructive effect on small businesses and sole traders who operate online.

"The European Commission contends that these rules will introduce a level playing field, as it means that sellers will not be in a position to undercut their competitors unfairly by using a lower VAT rate. However, because there’s no threshold at present, the real impact means that the smallest companies and sole traders are left unable to compete and face the stark reality of having to close their businesses down.

"It creates a divide between the multinational companies who have the systems to comply with these rules and those sole traders and those small businesses that simply can’t".

Carthy, who is a member of the parliament's Economic & Monetary Affairs Committee, continued:

"I have a number of apprehensions about how these rules will operate in practice.  I am concerned as to the practical, every day consequences for small businesses and sole traders who operate online.

“Those small businesses who survived the recession are now clinging on, hoping the ‘recovery’ will lift them and many are relying on innovative and creative online businesses.

"Small Enterprises be they online or otherwise are the lifeblood of the Irish economy and they cannot be disregarded or left to die out by disproportionate EU regulations".

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